In upcoming days we may know a great deal more than we do now about the value strategic buyers and financial players place on supermarket assets.
Next week, bids for three supermarket chains being marketed are due to Ahold, the beleaguered Dutch supermarket operator. Ahold's chains on the block are Bi-Lo and Bruno's, both in the Southeast, and Superdiplo in Spain. There have been few transactions of substantially sized retailers in recent time -- with one notable exception -- so it will be instructive to find out what those chains fetch.
The one exception, of course, is the sale of Shaw's Supermarkets to Albertsons. That $2.5 billion transaction involved the buy of 204 stores under the Shaw's and Star Markets banners from J Sainsbury of the United Kingdom. That valuation, considered to be a bit on the low side, puts the acquisition cost at about $12.3 million. The deal closed April 30. The price commanded by the Shaw's asset may not be of great predictive value of what a totally synergistic buyer might pay for a chain. Since Shaw's is geographically apart from Albertsons' territory, synergies between Albertsons and Shaws may be minimal apart from the combination of some back-office functions. Conversely, there are clues suggesting that the value of supermarket assets is depressed. Safeway could find no buyer for its Dominick's Finer Foods, even on a fire-sale basis.
So we'll see. In an interview with Reuters, Anders Moberg, Ahold's chief executive officer, asserted that Bi-Lo and Bruno's have attracted a good number of bids, "financial and strategic buyers; everyone you'd expect, really." Good news, but at the same time, he said another round of biding may be required for some assets and that some may be dismembered and sold in parts. If so, that bodes ill for their valuation.
You'll see more about the situation in the news article on Page 1. And, in the news feature referenced on Page 1, you'll see more about Ahold's ongoing pullout from Asia, Latin America and its anticipated retrenchment from other areas. Ahold has been in dire straits since it was rocked by an accounting scandal early last year. You'll find other news articles and a list concerning global retailing in this week's issue of SN, too.
Meanwhile, on a smaller scale, wholesaler Nash Finch said in recent days it would close 18 stores and put three others up for sale, an unfortunate denouement to its foray into speciality, multi-banner retailing. That means Nash Finch's corporately owned store count is destined to drop by 15%, to 85. This was reported on Page 1 of last week's SN. Nash Finch's troubles illustrate once again how difficult a hand has been dealt wholesalers.
One exception to that generalization seems to be Supervalu, which declared a 5% dividend increase at its annual meeting last week. In addition to its wholesaling business, Supervalu controls nearly 1,500 stores, most of which are owned or licensed Save-A-Lots. This suggests Supervalu has found peaceful harborage away from the undifferentiated center of the food retailing continuum, a good place to go now.
